Yahoo reported Thursday that attackers using computer software used the stolen credentials to log into Yahoo Mail accounts and search for names and email addresses on sent emails. Upon discovering the attack, Yahoo shutdown access to the affected accounts, alerted users and asked that they reset their passwords.

Yahoo, which did not disclose how many webmail accounts were affected, said it had no evidence that the usernames and passwords came from its own systems.

"Based on our current findings, the list of usernames and passwords that were used to execute the attack was likely collected from a third-party database compromise," Yahoo said.

While no details on the third party were revealed, if users had willingly shared credentials with the operators of the database, then the incident is an example of the dangers people face when using the same credentials for multiple sites. Businesses can also be affected if the same usernames and passwords are used at work.

In reporting the attack, Yahoo warned that "using the same password on multiple sites or services makes users particularly vulnerable to these types of attacks."

During the registration process for many sites, people are given the option of using their usernames and passwords for other services, such as Facebook or Twitter. The reason is for convenience to the user and to share information about the person with the other site for advertising purposes.

This scenario is dangerous for two reasons: People do not know the kind of security that will be used to protect the data and they have no idea what personal information will be collected, how it will be used and who will have access to it.

"You have to understand that you have to trust each actor when you make those kinds of linkages," Joni Brennan, executive director of the Kantara Initiative, said. Kantara is a nonprofit professional association developing frameworks for digital identity management.

For businesses, the attack is a reminder of the importance of having additional layers of protection when using an identity management system that provides single sign-on across multiple Web services.

First, the system should not actually share the same username and password across services and should require multiple types of authentication, such as recognizing the system being used or requiring a token or one-time password.

Brennan recommends that companies should step back and decide whether they should manage employee's identities across multiple sites and services or outsource it to another company or to a cloud service, such as Ping Identity and CA Technologies.

Many organizations are afraid to outsource something as important as identity management for their staff, clients and customers, Brennan said.

"But at the same time, they are assuming a risk by running those types of systems," she said. "It may be the case that it's better placed in a service provider or vender who actually has running that kind of service as their main core focus."